Citrix Beats Earnings — Still Cuts

Citrix released its Q4 2014 earnings last Wednesday, handily beating Wall Street expectations by reporting earnings of $1.10 cents per share on revenues of $851 million, up six percent on the same quarter in 2013, against Wall Street expectations of $1.03 cents per share on revenue of $844 million on both counts. At the same time, Citrix announced a restructuring program that will see 700 employees and a further 200 contractors losing their jobs. This restructuring also sees the end of VDI-in-a-Box, the all-in-one VDI platform that it acquired with Kaviza in 2010.

Citrix’s VDI-in-a-Box acquisition was a defensive move as much as anything else. With a simple scale-out architecture, VDI-in-a-Box was an order of magnitude easier to understand and implement than XenDesktop, making it immediately attractive to anyone getting a start in desktop virtualization. At the same time, it wasn’t just an SMB platform; VDI-in-a-Box could scale to support hundreds of servers, and Kaviza had licensed Citrix ICA remote display protocol. VDI-in-a-Box was suitable for deployment across relatively low bandwidth/high latency connections. But once Citrix had acquired VDI-in-a-Box, it never quite knew what to do with it. Following the acquisition, Citrix repositioned VDI-in-a-Box as a pure SMB solution, targeting deployments of no more than 300 desktops—far fewer than its real potential. Over time, this limit was expanded to support 500, then 3,000 desktops. The expansion on this limit was driven by system integrators who, keen to sell the simpler solution, pushed back against Citrix’s message. Citrix eventually took the step of letting it loose to compete, on paper at least, with XenDesktop, although Citrix never backed it with a dedicated marketing campaign.

Citrix has worked hard to simplify XenDesktop, and while it’s still not quite plug-and-play, it is no longer the daunting prospect it once was. With XenDesktop 7.6 bedded in, it makes sense for Citrix to offer a VDI-in-a-Box retirement package. End-of-Maintenance for VDI-in-a-Box is currently set for April 30, 2015, after which no further product updates will be released. Security patches will continue until End-of-Life, set for April 30, 2016. There is some ambiguity to these dates, as Citrix has left a note on a product matrix indicating that both end-of-maintenance and end-of-life dates will be extended if there is no new release of VDI-in-a-Box.

Citrix CEO Mark Templeton also confirmed a change of status for AppDNA. Going forward, AppDNA will no longer be available as a standalone product. Instead, it will be offered as a bundled component of XenApp and XenDesktop Platinum Edition. At one level, with the push to migrate from Windows XP behind them and the uncertainty of Windows 10 still to come, most enterprise IT organizations are standardizing on Windows 7 for the foreseeable future, minimizing the need for AppDNA’s application migration benefits. At the same time, with VMware championing the benefits of AppVolumes (previously CloudVolumes), Citrix may hope to use AppDNA as a counter for some of the application management benefits that AppVolumes offers.

Along with the earnings news, Mark Templeton hinted at some of his vision for Internet of Things startup Octoblu, positioning it in the same space as personal cloud automation leader IFTTT. Characterizing it as a “very small” acquisition, he went on to describe technology demonstrations that integrate the Octoblu platform with GoToMeeting, ShareFile, Podio, and Citrix Receiver. The company’s offerings will “trigger flows that set up meetings, that cause transcriptions to be created and distributed all automatically just based upon proximity in a conference room.”

On the face of it, this appears to be about as far as Citrix could get from its roots, but long-term Citrix watchers may see the similarities between this vision and the company’s groundbreaking 2001 Virtual Workspace video. With Microsoft turning Cortana into the virtual assistant that takes care of the administrative overhead, Octoblu could become the sensing network that provides the real-world context to make that 2001 vision work for real.